Corning Faces 10% Core Sales Decrease in Q1, Cautions Against Persisting Demand Softness for Q2

Corning Inc GLW reported a first-quarter FY23 core sales decline of 10% year-on-year to $3.37 billion, beating the consensus of $3.34 billion.
Display Technologies sales declined 20% Y/Y and 3% Q/Q to $763 million due to a decline in volume and glass price.
Optical Communications sales declined by 6% Y/Y and Q/Q to $1.13 billion, reflecting a greater-than-normal seasonal volume decline associated with the pacing of customer projects.
Specialty Materials sales decreased by 18% Y/Y and 20% Q/Q % to $406 million, consistent with normal seasonality.
Life Sciences sales decreased by 17% Y/Y and 13% Q/Q to $256 million, reflecting lower demand for COVID-related products.
Environmental Technologies sales grew by 5% Y/Y and 9% Q/Q to $431 million.
Core gross margin increased 160 bps Q/Q to 35.2%, and core operating margin expanded by 150 bps Q/Q to 15.5%, driven by the company's pricing and productivity-improvement actions.
Core EPS of $0.41 beat the consensus of $0.39. Corning used $(383) million in free cash flow.
Chair and CEO Wendell P. Weeks said, "Our first-quarter results reflect solid execution on the priorities we outlined in our last call. We took further pricing actions to help offset inflation, and we effectively adjusted our productivity ratios. As a result, profitability improved despite sequentially lower sales, which were impacted by recession-level demand in several key markets and overall weakness in China, as anticipated."
Weeks continued, "We expect our results to improve in the second quarter, although conditions remain weak in multiple markets. We are focused on profitability and cash flow and will continue to align our cost structure to demand.
Outlook: Corning sees Q2 core sales of $3.40 billion - $3.60 billion (consensus $3.57 billion) and core EPS of $0.42 - $0.49 (consensus $0.48).
Price Action: GLW shares traded lower by 0.87% at $33.37 in the premarket on the last check Tuesday.

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